Moneycontrol
Feb 14, 2017 01:54 PM IST | Source: Moneycontrol.com

Sell Marico; target of Rs 225: Axis Direct

Axis Direct is bearish on Marico has recommended sell rating on the stock with a target price of Rs 225 in its research report dated February 08, 2017.

Sell Marico; target of Rs 225: Axis Direct


Axis Direct's research report on Marico


Q3FY17 consolidated net sales, EBITDA, and adj. PAT declined7%, 6%, and 7%. India volume declined 4% YoY with healthy 6% volume growth in Saffola, mild 1% decline in Parachute and sharp 12% decline in VAHO (value added hair oil). International sales stood flat YoY (2% growth in constant currency). India OPM was up 110 bps YoY at 24.3% while International OPM was down430 bps YoY at 16.1%.


Outlook


Volume growth of 8-10% (management guidance) along with low inflation implies sales CAGR of 13% over FY17-20. Peak margin (18.7% in FY17E vs. 12.8% in FY12) restricts EPS CAGR to only 10% over FY17-20. We cut our FY17-18 earnings estimate by 5-6%. Valuations at FY18 P/E of 38x remain expensive. Maintain SELL with revised target price of Rs225 based on P/E of 30x (vs. Rs 230 earlier).

For all recommendations, click here

Disclaimer:
The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sections
Follow us on
Available On